Casanova v. Marathon Corporation

• Court: District Court, District of Columbia
• Decided: March 20, 2009
• Docket: Civil Action No. 2005-0496
• Status: Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

NUNO CASANOVA,

Plaintiff,

v. Civil Action 05-496 (JMF)

MARATHON CORPORATION, et al.,

Defendants.

MEMORANDUM OPINION

Currently pending and ready for resolution are the following motions: 1) Defendant

Chesapeake Electrical Systems, Inc.’s Motion to Dismiss Cross-Claims for Lack of Subject-

Matter Jurisdiction and, in the Alternative, for Failure to State a Claim Upon Which Relief May

be Granted [#152], 2) L&S Construction’s Motion to Strike Chesapeake Electric Systems Inc.’s

Moot and Untimely Motion to Dismiss, Opposition to Same in the Alternative, and Request for

Costs and Attorney[’s] Fees Necessitated in Having to Respond to Same (“L&S’s Mot.”) [#154],

3) Defendant Chesapeake Electrical Systems, Inc.’s Objection to and Motion to Strike

Marathon’s Evidence Submitted in Opposition to Chesapeake’s Motion to Dismiss

(“Chesapeake’s MTS”) [#162], and 4) Cross-Claimant Marathon Corporation’s Motion for

Summary Judgment [#165].

BACKGROUND

The Court will not herein provide a detailed review of the procedural history of this case.

Suffice it to say that plaintiff initially alleged various claims against three defendants: 1)

Marathon, the general contractor, 2) Capitol Paving, a subcontractor, and 3) Chesapeake Electrical, another subcontractor and that as a result of a cross claim filed by Marathon against

third party Ft. Myer Civil, numerous other subcontractors were brought into the suit, along with

their various cross and counter claims. The focus of this opinion will be on the claims between

defendants Marathon and Chesapeake, and third party defendant L&S, one of the additional

subcontractors that was brought into the suit as a result of Marathon’s claim against Ft. Myer.

DISCUSSION

I. L&S’s Motion to Strike Chesapeake’s Motion to Dismiss

L&S moves to strike Chesapeake’s motion to dismiss on two bases. First, L&S argues

that the motion to dismiss is moot because the cross claims have already been deemed conceded

by the Court: “Due to Chesapeake Electrical Systems, Inc.[’s] failure to answer and/or otherwise

file a timely responsive pleading to Marathon and L & S Construction’s Cross - Claims the court

has already determined that legal liability with respect to those claims has been conceded.”

L&S’s Mot. at 2. Second, L&S argues that Chesapeake waived its right to assert any defenses

because of its failure either to timely file an answer or responsive pleading or to move this Court

for leave to file its motion to dismiss. Id. at 3.

Chesapeake counters that, pursuant to Rules 12(h)(2) and (3) of the Federal Rules of

Civil Procedure, “federal courts must always evaluate their subject matter jurisdiction even if

considerable time has passed.” Defendant Chesapeake Electrical Systems, Inc.’s Reply in

Support of its Motion to Dismiss and Opposition to L&S Construction’s Motion to Strike at 2

(emphasis in original).

Chesapeake’s interpretation of Rule 12 is correct. In its motion to dismiss, Chesapeake

first argues that this Court lacks subject matter jurisdiction under Rule 12(b)(1) and that it is free

2 to make such an argument at any time. Memorandum of Law in Support of Defendant

Chesapeake Electrical Systems, Inc.’s Motion to Dismiss Cross-Claims for Lack of Subject-

Matter Jurisdiction and, in the Alternative, for Failure to State a Claim Upon Which Relief May

be Granted (“Chesapeake’s MTD”) at 5. Without regard to the merits of Chesapeake’s

argument, the case law clearly supports the proposition that a court may at any time consider a

challenge to its jurisdiction over the subject matter of a case. See Arbaugh v. Y & H Corp., 546

U.S. 500, 506 (2006) (“The objection that a federal court lacks subject-matter jurisdiction, see

Fed. Rule Civ. Proc. 12(b)(1), may be raised by a party, or by a court on its own initiative, at any

stage in the litigation, even after trial and the entry of judgment.”); United States ex rel.

Schweizer v. OCE, N.V., 577 F. Supp. 2d 169, 173 n.2 (D.D.C. 2008) (“Failure to raise certain

other defenses in a pre-answer motion or answer renders them forfeit, but the Court may always

dismiss an action for lack of subject matter jurisdiction.”).

II. Chesapeake’s Motion to Dismiss Marathon’s and L&S’s Cross Claims

The gravamen of Chesapeake’s motion is that the Court lacks jurisdiction over the

subject matter of Marathon’s and L&S’s cross claims because the relief they seeks is contingent

upon a finding of liability on Chesapeake’s part, a determination which the Court is yet to make.

Chesapeake’s MTD at 10. L&S counters that it is the practice of this Circuit to allow cross

claims for indemnification and contribution to go forward once the underlying liability is

determined and that the need for judicial economy argues against dismissing the cross claims at

this point in the litigation. L&S’s Mot. at 6.

Pursuant to Article III of the United States Constitution, “the judicial power of the United

States, shall be vested in one supreme Court, and in such inferior Courts as the Congress may

3 from time to time ordain and establish.” U.S. CONST. art. III, § 1. Such power to preside

extends only to “cases” and “controversies.” Id. § 2. In order to determine whether there exists a

case or controversy, the courts have developed various justiciability doctrines. Allen v. Wright,

468 U.S. 737, 750 (1984). Two of these doctrines–standing and ripeness–are implicated in the

case at bar.

The first doctrine, standing, contains the following three elements:

First, the plaintiff must have suffered an “injury in fact”-an invasion of a legally protected interest which is (a) concrete and particularized . . . and (b) “actual or imminent, not ‘conjectural’ or ‘hypothetical,’ ” . . . Second, there must be a causal connection between the injury and the conduct complained of-the injury has to be “fairly ... trace[able] to the challenged action of the defendant, and not ... th[e] result [of] the independent action of some third party not before the court.” . . . Third, it must be “likely,” as opposed to merely “speculative,” that the injury will be “redressed by a favorable decision.”

Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992) (internal citations omitted). In other

words, “[t]he injury alleged cannot be conjectural, hypothetical, remote, speculative or abstract;

it must have occurred or be certainly impending.” Ass’n of Admin. Law Judges v. U.S. Office of

Pers. Mgmt., 533 F. Supp. 2d 155, 158 (D.D.C. 2008) (citing Nat’l Treasury Employees Union v.

United Sates, 101 F.3d 1423, 1427 (D.C. Cir. 1996)). A related concept is that found in the

second relevant doctrine, that of ripeness, which requires an examination of the “fitness of the

issues for judicial decision and the hardship to the parties of withholding court consideration.”

Abbott Labs. v. Gardner, 387 U.S. 136, 149 (1967). “[I]ts basic rationale is to prevent the

courts, through avoidance of premature adjudication, from entangling themselves in abstract

disagreements over administrative policies, and also to protect the agencies from judicial

interference until an administrative decision has been formalized and its effects felt in a concrete

4 way by the challenging parties.” Id. at 148-49. Although claims are not ripe for adjudication if

they are contingent upon future events, see Thomas v. Union Carbide Agricultural Products Co.,

473 U.S. 568, 580-81 (1985), “if a threatened injury is sufficiently imminent to establish

standing, the constitutional requirements of the ripeness doctrine will necessarily be satisfied.”

Nat’l Treasury Employees Union, 101 F.3d at 1428.

L&S’s and Marathon’s claims for indemnification and contribution are, by their very

nature, contingent upon future events because they were asserted as derivative cross claims

against Chesapeake as a result of plaintiff’s original claims against Chesapeake. While the court

of appeals for this Circuit has not yet spoken to the issue, other Circuits have concluded that a

claim for indemnification premised on a potential liability to a third party is not justiciable under

Article III. Armstrong v. Ala. Power Co., 667 F.2d 1385, 1388-89 (11th Cir. 1982); A/S J.

Ludwig Mowinckles Rederi v. Tidewater Const. Corp., 559 F.2d 928, 932 (4th Cir. 1977);

Cunningham Bros., Inc. v. Bail, 407 F.2d 1165, 1169 (7th Cir.), cert. denied, 395 U.S. 959

(1969). See C.H. Heist Caribe Corp. v. Am. Home Assurance Co., 640 F.2d 479, 483 (3d Cir.

1981). Accord: Pardee v. Consumer Portfolio Servs., Inc., 344 F. Supp. 2d 823, 836 (D.R.I.

2004) (“Aptly, federal courts in other jurisdictions have routinely found that indemnity claims

are unripe until the alleged indemnitee’s liability has been fixed by a judgment or settlement.”);

Companion Assurance Co. v. Alliance Assurance Co., 585 F. Supp. 1382, 1385-86 (D.V.I.

1984); UNR Indus. Inc. v. Am. Mut. Liab. Ins. Co., 92 B.R. 319, 325-28 (N.D. Ill. 1988).

There is a perfect coincidence between the application of this principle and this Court’s

obligation to apply District of Columbia law in this diversity action. Erie R. Co. v. Tompkins,

304 U.S. 64 (1938). As I have stated in another opinion: “While there appears to be no District

5 of Columbia authority precisely on point, there appears to be a general rule that an indemnitor

cannot be sued until the indemnitee is first held liable. 42 C.J.S. Indemnity § 54 (2005)

(‘Generally, ... an indemnitee is not entitled to recover under the agreement until he has made an

actual payment or has otherwise suffered an actual loss.’).” Disability Rights Council of Greater

Wash. v. Wash. Metro. Area Transit Auth., No. 04-CV-498, 2006 WL 1102767, at *2 (D.D.C.

Apr. 26, 2006). As noted in that opinion, a claim for indemnification does not accrue until the

party seeking indemnification is held liable and makes a payment. Id. More specifically, in the

case cited in Disability Rights the D.C. Court of Appeals stated:

The counterclaim for indemnification was properly dismissed because that action is premature. The District has not yet paid any money, and while it could have filed a cross claim for indemnity or contribution in the first action under GS Civil Rule 13(f), it failed to do so. Therefore, we think the general rule that the right to sue for indemnification (absent a specific contract for indemnity to the contrary) accrues when payment has been legally made by the indemnitee applies here. 42 C.J.S Indemnity § 25 (1944).

District of Columbia v. D.C. Transit Sys., Inc., 248 A.2d 184, 186 (D.C. 1969).

If this Court were to entertain the indemnity and contribution claims, the result in this

case would be entirely different from the result had the case been filed in the Superior Court, for

this Court would be entertaining a case that the Superior Court would dismiss. That result is,

simply put, impossible. In Hanna v. Plummer, 380 U.S. 460 (1965), the Supreme Court stated:

Erie and its progeny make clear that when a federal court sitting in a diversity case is faced with a question of whether or not to apply state law, the importance of a state rule is indeed relevant, but only in the context of asking whether application of the rule would make so important a difference to the character or result of the litigation that failure to enforce it would unfairly discriminate against citizens of the forum State, or whether application of the rule would have so important an effect upon the fortunes of one or both of the litigants that failure to enforce it would be likely to cause a plaintiff to choose the federal court.

6 Id. at 468 n.9. That this Court would entertain an indemnity action prior to judgment against the

indemnitor while the Superior Court would not first discriminates against District of Columbia

residents in favor of out of state residents in diversity actions. Out of state residents could press

such a claim in this Court in diversity actions while District of Columbia residents could not

press such a claim in Superior Court. Moreover, plaintiffs who seek to press an indemnity or

contribution action prior to judgment would certainly choose this Court over the Superior Court

if they could. It therefore follows that this Court must follow the principle articulated in the

D.C. Transit Services case and dismiss the indemnity and contribution claims by both Marathon

and L&S as premature.

II. Marathon’s Cross Claims Based on Negligence and Breach of Contract State Claims Upon Which Relief Can be Granted and Chesapeake Will Be Deemed to have Admitted Them.

Unlike L&S, which only cross claims for indemnity or contribution, Marathon also

presses cross claims for negligence (Count I) and Breach of Contract (Count II). Defendant

Marathon Corporation’s Cross-Claim Against Defendant Chesapeake Electrical System, Inc.

[#10-2]. In Count I, Marathon alleges that Chesapeake had a duty to Marathon to safely install

the wire that struck plaintiff but breached that duty and, as a result, “Marathon has sustained

damages in being required to defend the instant lawsuit.” Id. ¶ 8. In Count II, Marathon alleges

that it and Chesapeake entered into a contract pursuant to which “Chesapeake agreed to install,

monitor, inspect, maintain, and repair” the line that struck Casanova. Id. ¶ 10. Because of the

breach of that contract, Marathon “demands judgment against co-defendant Chesapeake for

money damages, plus interest, costs, and reasonable attorney’s fees.” Id., ad damnum clause at

page 3.

Thus, Marathon is claiming that due to Chesapeake’s negligence, it has sustained

damages “in being required to defend the instant lawsuit.” Surely, claims for negligence and

7 breach of contract state claims upon which relief can be granted. They cannot be described as

premature since they speak of damages that have already been suffered and are being suffered.

In the ordinary case, those claims would proceed to trial but I have already concluded

that Chesapeake must be deemed to have conceded the claims made against it by Marathon and

L&S. Casanova v. Marathon Corp., 246 F.R.D. 376, 380 (D.D.C. 2007). I have reviewed that

opinion and realized that my refusal to reconsider my initial decision that refused to permit

Chesapeake to file its answers was premised upon my perception that the concession might not

ever prejudice Chesapeake because Marathon and L&S could seek indemnification only if they

were found liable to Casanova. Id. at 380. I appreciate that if Chesapeake cannot defend itself

against Marathon’s claims for negligence and breach of contract, I will have to enter judgment

on those claims and turn to the question of damages. I see nothing in that consequence that

would cause me to revisit my decision that Chesapeake’s failing to file its answers to the cross-

claims was not justified by excusable neglect and therefore Chesapeake will be deemed to have

conceded Marathon’s cross claims for negligence and breach of contract.

III. Chesapeake’s Motion to Strike Marathon’s Opposition Evidence

I have already concluded that statement of a worker, that was referenced by Liberto

Nunes, who told Nunes that he had dropped the cable that might have hit Casanova is not

hearsay as to Chesapeake. Casanova v. Marathon Corp., 570 F. Supp. 2d 53, 56-57 (D.D.C.

2008). The motion will therefore be denied, although given the dismissal of the indemnity and

contribution claims and my determination that Chesapeake may not offer a defense to Counts I

and II of Marathon’s cross-claim, that denial may not have any practical significance.

IV. Marathon’s Motion for Summary Judgement as to Chesapeake

8 In its motion for summary judgment, Marathon argues that the Court has already

concluded that by virtue of Chesapeake’s failure to file a timely answer to Marathon’s cross-

claims, “‘Chesapeake will be deemed to have conceded the claims made by Marathon.’”

Memorandum of Points and Authorities in Support of Cross-Claimant Marathon Corporation’s

Motion for Summary Judgment [#165-4] at 3 (quoting Casanova v. Marathon, 246 F.R.D. 376,

380 (D.D.C. 2007)). In light of the Court’s conclusion above that it lacks jurisdiction over

Marathon’s claims for indemnification and contribution, the only claims that remain at issue

therefore are Marathon’s claims for negligence and breach of contract. As to those claims, the

Court previously concluded that Chesapeake had failed to make a sufficient showing of

excusable neglect in support of its motion for reconsideration of the Court’s denial of its motion

for leave to file its untimely answers, noting that the decision was “well within the Court’s

discretion when the only reason given for Chesapeake’s failure to file timely answers was

because of its attorney’s failure to keep track of the deadline for filing those answers.” Id. In its

opposition to Marathon’s motion to dismiss, Chesapeake argues that, while Rule 12(a) provides

that a party must serve its answer to a cross-claim within 20 days after being served, under Rule

55, there is no time limit to the filing of an answer as long as the cross-claimant has not yet

sought a default judgment. Defendant Chesapeake Electrical Systems, Inc.’s Memorandum of

Points and Authorities in Support of Its Opposition to Marathon Corporation’s Motion for

Summary Judgment [#169-3] at 5 n.2.

While Marathon has not yet sought a default judgment, contrary to Chesapeake’s

argument, this in no way affects this Court’s previous finding that by failing to file a timely

answer to Marathon’s cross-claim, Chesapeake conceded Marathon’s allegations. Default

9 judgments are governed by Rule 55 of the Federal Rules of Civil Procedure. According to the

Rule, where the claim is for an amount that it not yet certain, the prevailing party must apply to

the court for a default judgment. Fed. R. Civ. P. 55(b). The basis for this Court’s previous

decision denying Chesapeake’s motion for reconsideration was the principle, articulated in the

case law and Local Rule 7(b), that a party’s failure to timely file an opposition to a motion

seeking relief permitted the Court to 1) strike the untimely opposition, 2) deem the motion

conceded, and 3) grant the relief requested. Chesapeake, 246 F.R.D. at 380 (citing D.A. v.

District of Columbia, No. 07-CV-1084, 2007 WL 4365452, at *7 (D.D.C. Dec. 6, 2007).

Additionally, there is the cognate principle that under Rule 8(a)(6) of the Federal Rules of Civil

Procedure, allegations in a complaint (other than as to damages) are deemed admitted if a

responsive pleading is required and the allegation is not denied. If a timely answer to a

complaint is not filed, it has to follow from Rule 8 that all the allegations in the complaint are

deemed admitted. Accordingly, this Court appropriately struck Chesapeake’s untimely answer

and now must deem Marathon’s allegations of negligence and breach of contract conceded.

Although Chesapeake has not formally moved this Court to reconsider its December 10,

2007 opinion cited above, it also has not provided any reason for the Court to do so, save its

argument that, under Rule 55, it should be permitted to file its answer to Marathon’s cross-claim

because a default judgment has not been entered against it. As the Court noted above however,

Rule 55 is inapplicable in this situation and therefore the Court’s previous ruling stands.

Marathon’s motion for summary judgment regarding its claims of negligence and breach of

contract as against Chesapeake will therefore be granted insofar as Chesapeake’s liability will be

10 deemed conceded and denied insofar as there remain genuine issues of material fact as to the

amount of damages Marathon incurred.

CONCLUSION

For the reasons stated herein, L&S’s motion to strike Chesapeake’s motion will be

denied, Chesapeake’s motion to dismiss Marathon’s and L&S’s cross claims for indemnity and

contribution will be granted, Chesapeake’s motion to strike Marathon’s evidence will be denied,

and Marathon’s motion for summary judgment as to Chesapeake will be granted in part and

denied in part. An Order accompanies this Memorandum Opinion.

Dated: March 20, 2009 /S/ JOHN M. FACCIOLA UNITED STATES MAGISTRATE JUDGE